POLYPROPYLENE FROM DANGOTE REFINERY TO ENTER THE MARKET SOON

The Dangote Oil Refinery has begun the startup of its polypropylene facility in Lagos, according to The PUNCH.

Source: The Street Journal

Sources report that the facility will be officially launched soon. S&P Global also notes that the startup of the 830,000 metric tonnes per year polypropylene facility was one of the final milestones in the commissioning process of Dangote’s oil refining and petrochemical complex, which has been underway since January 2024.

A trade source mentioned that Dangote Group started offering polypropylene supplies as early as February. Dangote Group President, Aliko Dangote, previously expressed the goal of meeting around 250,000 metric tonnes per year of domestic demand for polypropylene, which is widely used in plastic packaging and textiles.

Once fully operational, the Dangote facility is set to be the largest polypropylene production site in Africa, with two units producing 500,000 mt/year and 330,000 mt/year, respectively.

S&P Global reports that industry insiders have warned that this new capacity could rapidly take over market share in the existing polypropylene homopolymer market, which has been largely dominated by Indorama Eleme’s Port Harcourt refinery in Nigeria and imports from the Middle East.

In the oil sector, Dangote’s massive refinery complex has demonstrated an ability to significantly lower prices, leading to steep discounts in the gasoline retail market, particularly from the Nigerian National Petroleum Company Limited (NNPC). The refinery has already disrupted traditional trade routes for oil products typically shipped from Europe to West Africa, capturing a larger share of the domestic market as NNPC’s newly restarted refineries in Port Harcourt and Warri face operational issues.

Polypropylene production has begun, with supplies being distributed in 25kg bags, already affecting the local market, according to two sources quoted by Platts, part of S&P Global Commodity Insights.

According to one trade source, the Dangote Group began proactively offering polypropylene supplies as early as February.

Aliko Dangote, President of the Dangote Group, had previously expressed his goal of meeting approximately 250,000 metric tonnes per year of domestic demand for polypropylene, which is widely used in plastic packaging and textiles.

Once fully operational, the Dangote facility is expected to become Africa's largest polypropylene production site, with two units producing 500,000 mt/year and 330,000 mt/year, respectively.

S&P Global reports that market experts have cautioned that the new polypropylene production capacity from Dangote could rapidly seize market share in the existing polypropylene homopolymer market, which has been primarily dominated by Indorama Eleme’s Port Harcourt refinery in Nigeria, along with imports from the Middle East.

In the oil sector, the large privately owned Dangote complex has demonstrated an ability to significantly undercut local producers, resulting in steep gasoline price discounts from the Nigerian National Petroleum Company Limited (NNPC).

The refinery has already disrupted traditional trade routes for oil products that typically flowed from Europe to West Africa, capturing an increasing share of the domestic market as NNPC's recently restarted Port Harcourt and Warri refineries face operational challenges.

In February, the Dangote Group announced that the refinery is expected to reach its full capacity of 650,000 barrels per day by March, though this depends on the availability of crude.

Reports also indicated that there is no updated timeline for the petrochemical site to achieve full utilization.

Previously, the company mentioned that its $2bn petrochemical plant in Ibeju-Lekki, Lagos State, is designed to produce 77 different high-performance grades of polypropylene within the country.

With a projected turnover of $1.2bn, the Dangote Petrochemical plant, located alongside the Dangote Refinery, is set to meet the growing demands of the plastic processing industry, not only in Africa but also in global markets.

Providing an update on the petrochemical plant in Lagos, Devakumar Edwin, the Group Executive Director of Strategy, Capital Projects & Portfolio Development at Dangote Industries Limited, stated that the Dangote Petrochemical plant will stimulate significant investment in downstream industries. This will result in substantial value addition to the country, create employment opportunities, increase tax revenues, reduce foreign exchange outflows, and contribute to the growth of the nation’s Gross Domestic Product.

“We have 77 types of polypropylene, which can go for different uses that we can produce from our petrochemical plant. Currently, the plant is capable of producing about 900,000 tonnes of polypropylene per annum. Our Petrochemical plant should be the biggest in Africa.

“Right now, raw materials from polypropylene are imported into the country. There is no foreign exchange for manufacturers to import raw materials. The Dangote Petrochemical plant is going to take care of this challenge.

“When the raw materials are locally available, there will be many more people who will be willing to invest in the economy. So, it is not just the savings of foreign exchange from petrochemical products’ importation; the country’s downstream sector will also benefit hugely from the availability of petrochemicals in the country,” Edwin said last year.

ABOUT POLYPROPYLENE

Polypropylene is a synthetic material derived from petroleum-based thermoplastic polymers. Its primary raw material, propylene gas, is a by-product of oil and natural gas production. The propylene monomer is first extracted from crude oil in its gas form.

Polypropylene is used in a wide range of products, including plastic packaging, machinery and equipment parts, fibers and textiles, piping systems, chairs, and items for medical or laboratory applications, among others.

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